This case study provides an illustrative example of how national law can
drive the development of international law. As Chapter 9 explained, actual
payment of damages by States for international environmental harms is
the exception rather than the rule. The practical difficulties in establishing
jurisdiction, determining choice of law, and enforcing judgments serve
as important barriers to successful claims for liability and securing
awards. When coupled with nations' unwillingness to subscribe to liability
regimes, liability provisions in treaties are often reduced to mere expressions
of aspiration. UNCLOS Article 235(3), for example, calls on States to
cooperate in implementing and developing further international law "relating
to responsibility and liability for the assessment of and compensation
for damage and the settlement of related disputes..." Parties to
the London Convention similarly have called for the creation of a liability
regime, but none has yet been negotiated. BIRNIE & BOYLE op. cit.
at 291. Damage resulting from oil spills presents a notable exception
to this state of affairs.

An international liability system for pollution damage from oil spills
has been in place for over 25 years. The system operates under the aegis
of two two international oil spill conventions. Supplemented by private
compensation accords among the oil industry and oil tanker owners, these
conventions have been regularly used to provide compensation to parties
injured by oil spills. The first of these conventions, the International
Convention on Civil Liability for Oil Pollution Damage (CLC), provides
compensation for certain costs resulting from oil pollution discharged
by a seagoing vessel or any seaborne craft carrying bulk oil in cargo.
9 I.L.M. 45.

Adopted in 1969, the CLC channels liability to the shipowner, who is
strictly liable for releases subject to a small number of narrow exceptions.
The owner, who is required to carry insurance, is liable up to $14 million
to parties who have been injured or suffered a loss from the spill. Actions
brought under the CLC must be brought in the courts of the Contracting
State in which the damage occurred within 3 years from the date of damage,
but not later than six years after the date of the incident. Over fifty
nations have become parties to the CLC.

It was soon realized that the CLC's maximum liability was insufficiently
low, and in 1971 the International Oil Pollution Compensation Fund Convention
(the Fund Convention) was adopted. The Fund Convention serves two roles.
It provides limited coverage for compensation claims exceeding the CLC's
maximum coverage and shifts responsibility for the increased liability
from the shipowners to those who own the cargo. Essentially the Fund Convention
constitutes a levy on oil importers, primarily the oil companies whose
cargo the vessels are likely to be carrying. The Fund Convention provides
a maximum compensation of $16 million per incident for victims of oil
pollution damage who are not fully recompensed by the shipowner's liability
through the CLC Convention.

Thus the two Conventions provide a combined maximum liability of $30 million
for each incident, providing that the cost in case of large damages is
in effect borne by both the shipowner and the oil companies. If the liable
shipowner is not liable or cannot pay out, under certain circumstances
the Fund will pay the entire compensation due, up to $60 million for each
incident. The Fund Convention does not apply if the ship causing the polluting
incident failed to comply with provisions from other IMO conventions.
Since entering into force in 1976, the Fund Convention has been used in
72 incidents and paid over $180 million in compensation. In only 2 cases
has it proven insufficient to cover all claims. See, <http://www.IMO.ORG/imo/convent/liabilit.htm>;
DOUGLAS BRUBAKER, MARINE POLLUTION AND INTERNATIONAL LAW 158 (1993); Risk
Management, January 1994.

Importantly, the U.S. is not a party to either the CLC or the Fund Convention.
Dissatisfied with the level of liability provided by the CLC and Fund
Conventions, in the wake of the Exxon Valdez oil spill in Alaska the U.S.
passed the Oil Pollution Act of 1990 (OPA). P.L. 101-380 (1990). OPA provides
an excellent example of national law's influence on the development and
application of international law.

OPA requires that all new foreign and domestic tankers over 5,000 gross
tons docking in U.S. ports and transporting oil have double hulls. The
law provides a complex formula for phasing out older single hull vessels
over time, with only double-hulled tankers (or an equally effective double
containment system) permitted after 2015. While OPA does set limits for
total liability in the case of an oil spill, liability is unlimited if
the incident was proximately caused by (1) gross negligence or willful
misconduct or (2) a violation of an applicable federal safety, construction,
or operating regulation (e.g. the requirement of double hulls).

OPA and the associated laws provide for much higher limitations of liability
than those provided by CLC. For tankers this is defined as the greater
of $1200 per gross ton or $10 million, if over three thousand gross tons,
with smaller limits for smaller ships. However, the right to limit liability
is lost where the spill has been caused by, among other things, "gross
negligence". It is widely considered that, to put it inelegantly,
if the amount spilled is "gross" then the courts will consider
that "gross negligence" has been involved. Therefore it is considered
that in practice in the USA shipowners cannot rely upon any limitation
of liability in the event of an oil spill.

In addition, OPA calls for the provision of certificates of financial
responsibility providing evidence of insurance coverage up to the limitation
amounts provided (it is considered that insurers would not be liable beyond
the limitation amounts, even if the shipowner himself lost the right to
limit), and permitting direct action against the insurer who has given
the certificate.

The maximum applicable limit under OPA would, in practice, ... be approximately
$120 million. Therefore in principle the OPA limits of liability could
be covered by the P&I clubs [traditional insurers of oil tankers],
but they have so far refused to offer certificates of financial responsibility.
This means that any shipowner who spills oil in the USA may well find
that he has completely inadequate insurance, even granted that the P&I
clubs may well respond to indemnify him, despite having refused to give
a certificate of financial responsibility.

Douglas Brubaker, MARINE POLLUTION AND INTERNATIONAL LAW 158 (1993).

The main elements of the Oil Pollution Act are the following:

1) a comprehensive federal liability scheme, addressing all discharges
of oil to navigable waters, the exclusive economic zone, and shorelines;
2) a single, unified federal fund, called the Oil Spill Liability Trust
Fund, to pay for the cleanup and other costs of federal oil spill response
authorized at $1 billion, far higher than any of the other funds previously
authorized;
3) stronger federal authority to order removal action or to conduct the
removal action itself;
4) drastically revised spill prevention control and countermeasure plan
requirements for onshore facilities, offshore facilities, and vessels;
5) tougher criminal penalties;
6) higher civil penalties for spills of oil and for spills of hazardous
substances;
7) tighter standards and reviews for licensing tank vessel personnel,
and for equipment and operations of tank vessels, including the requirement
of double hulls; * * *

Recoverable damages are grouped in six categories, several of which appear
to overlap:

(1) natural resource damages;
(2) damages to real and personal property, including loss of use of such
property;
(3) loss of subsistence use of natural resources;
(4) loss of tax and other revenues;
(5) loss of profits or earning capacity; and
(6) increased costs of public services.* * *

Three of these classes of damages from oil discharges ?? natural resource
damages, loss of tax revenue, and increased cost of public services ??
are recoverable only by governmental entities. Natural resource damages
are recoverable by four classes of natural resource trustee: federal,
state, foreign government, or Indian tribes. Loss of tax and other forms
of governmental revenue are recoverable by the United States, the states,
and political subdivisions of states. The increased cost of public services
(including such items as fire protection) caused by an oil discharge,
are recoverable by the same claimants. * * *

Because the U.S. is such a large importer of oil, OPA's construction
requirements had a significant impact on foreign tankers. At the time
of its passage, OPA was denounced by some countries as a unilateral imposition
of America's standards on the rest of the world and as a violation of
UNCLOS. In reading the UNCLOS excerpts below, consider whether this was
a valid charge. How might the U.S. justify its decision?

UNCLOS Article 21 Laws and regulations of the coastal State relating
to innocent passage

1. The coastal State may adopt laws and regulations, in conformity with
the provisions of this Convention and other rules of international law,
relating to innocent passage through the territorial sea, in respect of
all or any of the following:* * *

(d) the conservation of the living resources of the sea;
(e) the prevention of infringement of the fisheries laws and regulations
of the coastal State;
(f) the preservation of the environment of the coastal State and the prevention,
reduction and control of pollution thereof;* * *

2. Such laws and regulations shall not apply to the design, construction,
manning or equipment of foreign ships unless they are giving effect to
generally accepted international rules or standards.

UNCLOS Article 211 Pollution from vessels

1. States, acting through the competent international organization or
general diplomatic conference, shall establish international rules and
standards to prevent, reduce and control pollution of the marine environment
from vessels and promote the adoption, in the same manner, wherever appropriate,
of routeing systems designed to minimize the threat of accidents which
might cause pollution of the marine environment, including the coastline,
and pollution damage to the related interests of coastal States. Such
rules and standards shall, in the same manner, be re-examined from time
to time as necessary.* * *

3. States which establish particular requirements for the prevention,
reduction and control of pollution of the marine environment as a condition
for the entry of foreign vessels into their ports or internal waters or
for a call at their off-shore terminals shall give due publicity to such
requirements and shall communicate them to the competent international
organization.* * *

4. Coastal States may, in the exercise of their sovereignty within their
territorial sea, adopt laws and regulations for the prevention, reduction
and control of marine pollution from foreign vessels, including vessels
exercising the right of innocent passage. Such laws and regulations shall...
not hamper innocent passage of foreign vessels.* * *

In this context, it is also worth comparing OPA to the Arctic Waters Pollution
Act of 1970, passed by Canada to strengthen environmental protection in
its arctic archipelago (see p. x). At the time, the U.S strongly denounced
Canada's action as an unwarranted unilateral exercise of national authority
and refused to recognize the legislation. Is OPA any different?

While double-hulled tankers have been held up in the public eye as a
solution to oil spills, their merits are hotly debated. At the time of
the Oil Pollution Act's passage, proponents of double-hulls contended
that if the Exxon Valdez had been built with a double hull far less oil
would have been released. Critics replied that having a double hull actually
would have increased the chances that the Valdez sunk, losing all of its
cargo and causing a worse accident than it did. Randle op. cit. Indeed,
a government study mandated by the Act concluded that a double hull would
not have prevented the Exxon Valdez spill off Alaska and, after studying
17 tanker design concepts, declared that no single design is superior
in preventing all oil spill accidents. Beyond their added costs of construction,
double-hulled tankers may also collect hydrocarbon vapors in the space
between the hulls, potentially creating a risk of fires and explosions.
Their more complex design makes inspection and maintenance less straightforward
and, some contend, makes the tankers less stable following an accident.
Moreover, because the double hulls reduce cargo space for carrying oil,
overall they increase the total amount of tanker traffic needed to carry
the same amount of oil, thus increasing the possibility for accidents.
Tanker Spills: Prevention by Design, Oil & Gas Journal, March 11.

In any case, OPA proved effective because the world responded. In 1992
MARPOL was amended to require double hulls or alternative designs with
the same level of protection in tankers ordered after July 1993. MARPOL
Regulation 13F. Since the price of oil has dropped in recent years, tanker
owners have been operating on slim margins, allowing their fleets to age
rather than order expensive new tankers. The average age of tankers is
now over 18 years old and there is concern over a "safety gap."
MARPOL's double hull requirement applied to new ships and to older ships
when they reached 25 years of age. Within the next few years many of the
world's tankers will either have to be refitted or scrapped. Indeed only
a few hundred of the world's more than 3,500 tankers have double-hulls.
30 Years On: What's Happened Since the Torrey Canyon?, IMO News at 14-15,
Number 1:1997.

OPA had another effect, as well. A Civil International Liability Protocol
had been proposed in 1984 to ensure increased funds for recovery of costs
under the CLC and Fund Convention. Under the Protocol the upper limit
on liability was significantly raised and coverage was extended to pollution
damage in the EEZ as well as preventative measures taken even if no spill
occurred so long as the threat was grave and imminent. Each State party
was responsible for making sure all importing oil companies contribute
to the fund as required, and failure to do so made the State itself responsible
for making up the loss. The Protocol, however, was never ratified by enough
large oil importing States to enter into force. Brubaker, op. cit., at
158.

Following passage of OPA, the Protocol was revised in order to lower
the required number of ratification of oil importing States for entry
into force. It was adopted soon after. The 1992 Protocols to the CLC and
Fund Conventions significantly increase the compensation available to
victims of oil pollution damage from tankers, substantially increasing
the shipowner's liability. Thus while the prior CLC and Fund Convention
in most cases provided a maximum of $30 million available in compensation,
depending on the circumstances of the spill the 1992 Protocols could,
combined with the CLC and Fund Conventions, provide up to $208 million
in compensation. The geographic coverage of the Conventions was extended,
as well, to include the EEZ of contracting States. The range of compensable
costs is narrower than under the OPA, since only costs for reasonable
measures to prevent loss or damage and to restore the contaminated environment
are compensable.